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Business Law

Did You Know? Not All LLCs Are Created Equal — NJ, NY, and DE Each Play by Different Rules

Forming an LLC is one of the most common ways to start a business — but the rules differ sharply depending on the state. Three of the most popular states for LLCs in our community are New Jersey, New York, and Delaware. Here’s how they compare:

Privacy:

• New Jersey requires the names of members or managers to be listed in the Certificate of Formation, so there is no anonymity.
• New York and Delaware do not require members’ names in the public filings. That means you can preserve anonymity — at least on paper and with certain caveats.

Operating Agreements:

• New Jersey does not require an operating agreement, but it’s always smart to have one in writing to avoid disputes (I would say that maybe in the case of a single-member LLC you can get away without having an operating agreement, but with two or more members, it’s imperative).
• New York requires a written operating agreement within 90 days of formation.
• Delaware requires an operating agreement too, but it can be oral, written, or even implied under Del. Code Ann. tit. 6, § 18-101 (again, opting for a written operating agreement is the best case scenario).

Filing Requirements:

• Each state has its own filing fees and annual requirements. NJ requires an annual report; NY requires a biennial statement; DE requires an annual franchise tax and report.

The Caveat — Foreign Qualification: Even if you form your LLC in Delaware or New York for privacy, if you actually operate your business in New Jersey, you’ll usually need to file a foreign certificate of authority in NJ. That filing can require disclosing ownership information—sometimes eliminating the privacy advantage you thought you had.

In cases of a true holding company (i.e., a business that’s not really doing business in another state) you may be able to get away without filing for foreign registration—but everything on a case-by-case basis.

Bottom line: LLC formation isn’t one-size-fits-all. The choice of state impacts not only your privacy but also your obligations, costs, and flexibility.

And remember, if you’re running a business here in NJ, don’t assume a Delaware or New York LLC will automatically keep your name out of public filings.

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Ariel A. Bivas Bivas Law LLC 136 Madison Avenue, 6th Floor New York, NY 10016 Tel: (718)-490-3916 Email: [email protected] Website: www.bivas.law

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